- “The Standing Committees on Ethics and Professional Responsibility and Professional Regulation have developed a Third Discussion Draft of possible amendments to the Model Rules of Professional Conduct concerning lawyers’ client due diligence obligations. This Third Discussion Draft addresses Model Rule Conduct 1.16 (Declining or Terminating Representation) and its Comments.”
- “Your comments will assist the Committees in determining whether and how to proceed when asking the House of Delegates to amend the Rules of Professional Conduct in August 2023.”
- [Information via the link on how to join their Feburary 28 zoom roundtable and call for commentary on this topic]
“View the Third Discussion Draft here.” Here are highlights from introductory commentary and context —
- “The impetus for the Committees’ work on this subject related to concerns about lawyers facilitating money laundering and terrorism financing. As noted in the memo accompanying the Standing Committees’ First Discussion Draft, the application of anti-money laundering and counter terrorism financing laws and regulations to lawyers is a complex subject that can generally be divided into three overarching topics:
- a lawyer’s responsibility to know the client — essentially to conduct client due diligence — to ensure that the lawyer is not being used to assist a client in a crime or fraud;
- whether, when, and how a lawyer might be required to disclose to the government information about the beneficial ownership of an entity the lawyer forms on behalf of a client or otherwise represents; and
- whether, when, and how a lawyer might be required to report to the government ‘suspicious activity’ of a client.”
- “For example, the ABA urges lawyers to engage in a risk-based analysis to determine whether to accept a client or a matter as set forth in the ABA Voluntary Good Practices Guidance for Lawyers to Detect and Combat Money Laundering.”
- “Many of the federal anti-money laundering (AML) legislation and regulations have and continue to seek to cover lawyers. However, depending on how the legislation and regulations are written, subjecting lawyers to the AML requirements could conflict with a lawyers’ obligations under Model Rule 1.6, the attorney-client privilege, and the ABA’s longstanding policy supporting state- based regulation of the legal profession. Therefore, the ABA has advocated to ensure that the legal profession is not, generally, subject to such federal legislation, rules, and regulations.”
- “Despite the ABA Good Practices Guidance, the Ethics Opinions, and the current text of the Black Letter and Comments to the Model Rules, some governmental and non-governmental entities, domestically and internationally, continue to urge that the legal profession create an enforceable client due diligence obligation in the Model Rules. The Committees believe that the Model Rules already include such an obligation, but that additional clarity will be helpful.”
- “In deliberating on the best approach to this issue after reviewing and discussing all comments and testimony, the Committees revisited where and when the Model Rules assume that the lawyer will conduct client due diligence5 and where such inquiry implicates and likely conflicts with other Model Rules and Ethics Opinions.6 The Committees evaluated how best to resolve ongoing concerns relating to mens rea and the inter-relationship between the possible changes to Model Rule 1.2 and other Rules.”
- “The result of these deliberations was the development of the attached Third Discussion Draft setting forth possible amendments to the Black Letter and Comments to Model Rule 1.16 (Declining or Terminating Representation). The Third Discussion Draft states specifically what is implicit by providing in Paragraph (a) that a ‘lawyer shall assess the facts and circumstances of each representation to determine whether the lawyer may accept or continue the representation.’ The Committee chose ‘assess’ because inherent in its definition is the weighing or evaluation as opposed to mere fact gathering.”
- “Proposed new language in the Comments to Model Rule 1.16, Declining or Terminating Representation, make clear that the duty to assess the facts and circumstances applies both before accepting a representation and continues throughout the representation. The lawyer’s assessment of the facts and circumstances should be informed by the risk posed by the representation. Exemplary factors to be considered by the lawyer in conducting the risk-based assessment are included in the Comment.”
- “On behalf of the Ethics and Professional Regulation Committees, thank you for your input. It is critical to our work, and to ensure that the ABA continues to provide current and optimal guidance to the profession.”